A Guide to Out-of-Network Insurance Billing for Plastic Surgeons
Billing insurance for patients with out-of-network (OON) benefits is a tricky process. But for many plastic surgeons, it’s worth navigating the complexities to get patients the care they need while still getting reimbursed. The good news? It’s entirely possible with the right strategies in place.
Below, we’ll break it down step-by-step, explore common challenges, and share real-world examples to help you master the OON billing process.
How Out-of-Network Billing Works
1. Verifying the Patient’s OON Benefits
This is where it all begins. Without verifying a patient’s insurance coverage, you’re flying blind. Here’s what to check for upfront:
- Does the plan cover out-of-network services? Some plans completely exclude OON coverage. If that’s the case, patients will need to go out-of-pocket for your services.
- Deductibles and coinsurance. Be prepared to explain these to patients. OON deductibles are often high (think $5,000 or more), and patients typically pay 30-50% after meeting it.
- Pre-authorization requirements. Many OON procedures still need prior authorization. Without approval, claims are likely to be denied.
Case Example: A patient schedules a breast reconstruction surgery. During verification, your billing staff discovers the plan requires pre-authorization—but the patient doesn’t meet the insurer’s “medical necessity” criteria. Without early discovery, billing this case would result in a denied claim and an unhappy patient.
2. Payment Collection Before or After the Procedure
OON reimbursement isn’t guaranteed. To mitigate risk, many plastic surgeons require patients to pay upfront.
Here’s how it works:
- Collect full or partial payment upfront and provide a Superbill (a detailed receipt with billing codes) for patients to submit to their insurer.
- Alternatively, some surgeons bill insurance directly and then “balance-bill” the patient for the difference between what insurance pays and your fee.
Pro Tip: Explain the upfront payment clearly during the consultation. Set realistic expectations about the likelihood and timeline of reimbursement. Patients appreciate transparency.
Case Example: A patient undergoes a rhinoplasty. Your clinic collects an upfront payment of $8,000. After submitting a claim, the insurer reimburses the patient $2,500 based on their “allowed amount.” You save time chasing reimbursement, and the patient knows exactly what to expect.
3. Submitting Accurate Claims
Accuracy is key when submitting OON claims. Even small mistakes can lead to delays or denials. Here’s your checklist for success:
- Use the CMS-1500 form (or electronic format).
- Include correct CPT codes (e.g., 19316 for breast reduction, 30420 for nasal reconstruction).
- Add appropriate ICD-10 diagnosis codes to justify medical necessity (e.g., M54.2 for neck pain due to macromastia).
- Attach detailed operative notes and supporting documentation.
Remember, insurers love asking for backup, so it’s better to provide comprehensive documentation upfront.
4. Handling Reimbursement
Here’s the hard truth: Insurers rarely pay you what your services are worth. They base payments on an “allowed amount” (often much lower than your fee).
- Insurers may reimburse just 50-80% of the allowed amount.
- Patients are responsible for the difference, also known as balance billing.
Case Example: You perform a septoplasty and charge $10,000. The insurer’s allowed amount is $2,000. The patient’s coinsurance is 20%, leaving them with $400 covered. The remaining $9,600? It’s your patient’s responsibility. Make sure they understand this before moving forward.
Key Challenges of Out-of-Network Billing (and How to Overcome Them)
1. Low Reimbursement Rates
Most insurers set their reimbursement rates based on “usual and customary” (UCR) fees. Unfortunately, these rates are notoriously low compared to the actual cost of procedures.
- Example: If your tummy tuck costs $12,000 and the insurer’s UCR is $3,000, even the most robust OON benefits won’t come close to covering your fee.
Solution: Proactively communicate costs and payment expectations to avoid surprises. Additionally, consider partnering with financing companies like CareCredit to make payments more manageable for patients.
2. Claim Denials and Delays
It’s no secret that insurers look for reasons to deny OON claims. Common reasons include:
- “Procedure not medically necessary.”
- Incorrect or incomplete coding.
- Missing pre-authorization.
Solution: Stay ahead of denials by meticulously documenting every detail. Develop an appeals process for denied claims, and invest in ongoing staff training to improve coding accuracy.
Case Example: A patient’s claim for breast reconstruction is denied for “lack of medical necessity.” Your staff quickly submits an appeal with additional patient history and operative notes, securing full reimbursement on the second attempt.
3. Patient Misunderstandings and Frustrations
OON benefits are complicated, and many patients don’t fully understand how they work. When they receive lower-than-expected reimbursement, they may become frustrated or even refuse to pay the balance.
Solution: Use easy-to-understand language during consultations. Break down the numbers and provide written estimates of expected out-of-pocket costs. This avoids costly misunderstandings.
4. Administrative Burden
OON billing requires more time and effort than in-network billing.
- Expect countless follow-up calls to insurers.
- Appeals may become the norm.
- Patients often need help filing claims or understanding reimbursement.
Solution: Delegate! Consider outsourcing to a medical billing service or hiring specialized staff trained in OON claims.
5. Legal Restrictions on Balance Billing
Several states, including California, New York, and Texas, have laws limiting balance billing for OON providers. The No Surprises Act (2022) also bans certain types of balance billing for emergency care.
Solution: Familiarize yourself with both state and federal regulations. When in doubt, consult a healthcare lawyer to ensure compliance
6. Single Case Agreements (SCA)
Single Case Agreements (SCAs) are specialized contracts negotiated between a healthcare provider and an insurance company to cover services for a specific patient at an agreed-upon rate. These agreements are typically used for services rendered out-of-network (OON) when a patient requires care that is not readily available within the insurance company’s in-network providers. SCAs allow providers to offer highly specialized or unique care without requiring patients to bear the full cost out-of-pocket, bridging a gap between insurance coverage and patient needs. They are particularly common in cases where the patient’s medical needs demand expertise or treatment options that cannot be met by the existing in-network resources.
SCAs are also beneficial for insurance companies, as they help ensure that their members receive necessary care, preventing potential complications or higher costs that could arise from delayed or insufficient treatment. However, negotiating these agreements can be complex, as they involve detailed discussions around rates, medical necessity, and the scope of care being provided.
Solution:
To effectively manage SCAs, it is essential to establish a streamlined and well-documented process for negotiating with payers. Start by clearly outlining the patient’s care requirements, including supporting documentation that highlights the medical necessity for the specialized treatment you are providing. Include specifics about why in-network providers cannot meet the patient’s needs, as this will be a critical point for justifying the agreement.
Additionally, document your rates and ensure they are competitive and reflective of the services you are offering. Transparency and thorough preparation are key to building trust with the payer and expediting the agreement process. Engaging an experienced billing or legal team to assist with negotiations can be invaluable, as they can help navigate complex payer requirements, address potential disputes, and ensure the terms of the agreement align with both the payer’s policies and your practice’s financial goals.
Lastly, monitoring ongoing SCAs and maintaining proper communication with all parties involved, including the patient, insurance payer, and your internal team, is crucial to ensuring a smooth process. By proactively managing these agreements, you can provide patients with quality care while maintaining financial sustainability for your practice.
Best Practices for Out-of-Network Billing Success
- Verify First: Always confirm a patient’s benefits before scheduling procedures.
- Clarify Costs: Provide clear, itemized estimates of what patients owe.
- Require Upfront Payment: Collect full or partial payment before the procedure.
- Use Detailed Documentation: Ensure claims are supported by strong operative notes and correct codes.
- Appeal Denials: Don’t take “no” for an answer. Many denied claims are overturned upon appeal.
- Outsource Billing: Professionals specialized in OON billing can save time and headaches.
- Offer Financing: Make costs more manageable by providing patient financing options.
Final Thoughts
Out-of-network billing is a double-edged sword. On one hand, it offers flexibility and often higher fees than in-network reimbursement. On the other, it’s a complex, time-consuming process that can frustrate patients and staff alike.
For many plastic surgeons, the best approach is to remain OON for cash-pay cosmetic procedures while going in-network for reconstructive surgeries. This balance ensures smoother operations and stronger patient satisfaction.
Would you like a sample OON benefits verification script or tips on navigating appeals? Drop us a message—we’re here to help!